Bitcoin and Altcoins Surge Amidst US CPI Drop and Rising Odds of Federal Rate Cut

Key Points

• Bitcoin’s price surged to $111,500, a 2.5% daily increase, following softer-than-expected US CPI numbers for September.
• The likelihood of Fed rate cuts next week has risen to 99%, leading to a quick rally of altcoins.

Bitcoin’s price experienced a significant increase, reaching a level of $111,500. This jump, which represented a 2.5% daily gain, came on the heels of softer than anticipated US Consumer Price Index (CPI) figures for the month of September.

The inflation rate in the US appears to be on a downward trend. This has led to a spike in the probability of the Federal Reserve cutting rates next week, with data from CME Fed Watch tools indicating a 99% chance.

Altcoins Rally Amid Lower Inflation

As a result of this economic context, altcoins such as Ethereum, XRP, and Binance Coin are experiencing a rapid rally, each gaining over 3% in value.

The price of Bitcoin rebounded from its support levels of $110,000 following the release of the US CPI data. Crypto analyst Ted Pillows suggested that Bitcoin (BTC) needs to reclaim the $113,000-$114,000 range to confirm further upside potential.

Pillows also cautioned that if the current rally turns out to be another false breakout, the market could experience a sharp correction in the near future.

US CPI Data and Its Implications

The US Labor Department released a Consumer Price Index (CPI) report, which is considered a “rare exception” due to the ongoing government shutdown. The report revealed that inflation cooled more than expected in September.

The headline CPI rose 3.0% year-over-year, slightly below the 3.1% forecast, while the core CPI, which excludes food and energy, also came in at 3.0%, under expectations of 3.1%.

Both the monthly headline and core CPI readings were weaker than projected, signaling softer inflationary pressures. This has once again triggered the risk-ON sentiment and paved the way for another Federal Reserve rate cut next week.

In light of the CPI inflation data, the US market is also showing strength with the S&P 500 gaining nearly 1% to record highs and approaching nearly 6,800.

The overall cooling of inflation is beneficial for altcoins, as the Federal Reserve could pivot further towards quantitative easing. The data from the CME Fed watch tool shows a 99% chance of another 25 bps rate cut coming next week on October 29.

However, it remains to be seen whether the bulls could pull this off for a sustained altseason. On-chain data shows that a trader with a claimed 10/10 success rate has reportedly opened $150 million in long positions ahead of former President Trump’s speech today. This trader is said to have accurately predicted every major pump and dump in Bitcoin and Ethereum.